Thompson Plumbing Inc. is a wholesaler of plumbing accessories. Thompson Plumbing began operations in September of the current year and engaged in the following transactions during September and October of this year. Thompson Plumbing uses a perpetual inventory system.

Sept.	03		Purchased $240,000 of plumbing accessories, terms n/30.
Sept.	15		Sold $180,000 of plumbing accessories, terms n/60. The cost of the accessories sold is $120,000.
Sept.	28		Purchased $360,000 of plumbing accessories, terms n/45.
Oct.	03		Settled the $240,000 purchase of September 3.
Oct.	15		Sold $450,000 of plumbing accessories, terms n/60. The cost of the accessories sold is $300,000.
Oct.	27		Purchased $540,000 of plumbing accessories, terms n/30.

Required: a. Compute the gross profit (loss) on Thompson Plumbings transactions during September and October.

b. Compute the gross profit (loss) on Thompson Plumbings transactions during September and October if a cash-basis accounting system was used. (Hint: In a cash-basis system, only transactions that result in cash being received or paid are recorded.)

d. Assume that the fair value of Thompson Plumbings inventory at October 31 is $900,000. A potential lender asks Thompson Plumbing to prepare a fair-valuebased balance sheet. Prepare the journal entry to reflect inventory at fair value. (Hint: Increase the Inventory account by the difference between fair value and book value with the offset to an account titled Revaluation of Inventory to Market Value.)

Both companies use a perpetual inventory system.

Required:

a. Record this series of transactions in the general journal of Siogo Shoes. (The company records sales at gross sales price.)

b. Record this series of transactions in the general journal of Sole Mates. (The company records purchases of merchandise at net cost and uses a Transportation-in account to record transportation charges on inbound shipments.)